This is probably not something anyone wants to hear, but businesses fail all the time. According to the U.S. Chamber of Commerce, small businesses are probably the most affected, with 80% of them not even making it through their first year. Budgeting, spending, and monitoring cash flow are all inherent challenges of running a business.
Spending, especially, can make or break an organization. A business should have a consistent cash flow, with timely and thorough payments going in and coming out. Contracts need to be up-to-date with the benefits being realized. Suppliers should be vetted. Developing and sticking to a budget is crucial to success. Other areas, such as spending visibility, raising capital, and preparing for the unexpected can all lead to success.
Watch Out For Fraud And Risk
Just like when you’re buying whole life insurance or looking to make a big purchase, watching out for potential fraud is part of the process. It’s no different at your organization. Fraud can happen in several different ways. Some key indicators of inventory theft might be:
- Missing packing slips
- Employees living above their means
- Customers complaining about lost items or goods
- Excessive reports of damaged goods
- Significant drops in sales (especially when it’s busy)
- Missing or misplaced inventory
- Inaccurate reporting
Mitigating risk is part of a manager’s job, so watching out for things that are out of the ordinary and inconsistent. Think about installing video surveillance, regularly auditing inventory, and using inventory management software to help reduce fraud/risk across the organization.
Increase Spend Visibility By Leveraging Technology
Improving spend visibility begins with categorizing your suppliers. No, really. Spending some time grouping and organizing them——which is pretty easy if you already use a vendor management system at your organization—makes it easier to improve the overall accuracy of your spend analysis. Good visibility means knowing where you’re money is going and how your spending is impacting the organization.
Are you doing business with reputable vendors? Are they price gouging you? Are the business related to each other in a corporate manner? If they are, you might be able to negotiate better contract terms or discounts (including early payment discounts). Are there areas where suppliers can be consolidated to get better deals on products and services? All of these are pertinent questions where the answer can help improve spend visibility.
Additional, cloud-based tools are also useful for real-time spend analysis. Using analytical and visibility tools as part of your strategy for spend management/visibility is key to succeeding in this challenging area.
Use Inventory Management
Depending on your organization, inventory can be split up into several categories: raw materials (the stuff used to actually manufacture things), components (made with raw materials), WIPs (work in progress), finished goods (what you’re likely selling to the consumers), items used to maintain the operation (MRO goods), packing materials, safety materials, transit inventory (items that are moving between warehouses, distribution, and excess inventory (unsold goods or materials).
Inventory is a transitional concept. Between the manufacturing of goods and the actual fulfillment of orders, managing inventory properly has a direct impact on the organization. Inventory data influences purchasing, which in turn influences fulfillment. Analyzing purchasing trends and past experience helps you manage your inventory better.
Having this information readily available also leads to better decisions, improving your cash flow, and ultimately avoiding wasting time or money. Using strong inventory management software tools is essential to ensure you’re getting the most out of your inventory management and reducing expenses wherever possible.
Remain In Compliance
Compliance is critical in any aspect of supply chain logistics. In inventory management, ensure you’re complying with established company procedures and protocols. It’s also crucial to ensure PCI – payment card industry – standards are being held up at your organization. Since inventory management deals with payments, many o which are going to be via cards, maintaining these compliance standards is essential to smooth and streamline inventory control procedures.
Build Supplier Relationships
Building relationships is sort of the goal of any business. Positive, well-defined relationships are often the driving force behind success. It should be no different in regard to your suppliers. Building up the relationship doesn’t just make everyone more positive; it has visible and tangible impacts on the business itself. Working with a supplier you trust saves money. Instead of trying to search for and vet new suppliers constantly, building up relationships with existing suppliers means you can save thousands by sticking with them instead of trying to find new ones.
Consolidating suppliers is also a good option for reducing costs and building better relationships with existing, frequently-used suppliers. Better efficiency also comes into play here, because a supplier with whom you have a good relationship might be able to speed supply chain issues up a bit and even offer an early payment discount for their invoices. When it all comes down to it, having happy suppliers means a happier team, happier customers, and smoother business operations.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.